BNPL Isn’t Just Lending, It’s a Card Growth Engine
By Bryce Deeney, co-founder and CEO of equipifi
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Debit cards are having a moment, and it’s because of Buy Now, Pay Later (BNPL).
With companies like Affirm and Klarna introducing millions of debit cards with installment loan functionality, and with a growing number of financial institutions launching their own BNPL solutions on debit rails, it is clear that combining debit cards with BNPL is emerging as a significant trend. These enhanced debit cards are increasingly being viewed as “the new face of credit.”
Regardless whether BNPL is offered by fintechs or traditional financial institutions, the industry is aligning around a common strategy. This latest evolution of purchase financing is poised to become a permanent part of the payments ecosystem. For BNPL providers, this shift is both logical and necessary. Their business models rely on growing their user base, increasing engagement, and ensuring loan quality.
Meanwhile, 90% of U.S. adults have a debit card. Reaching consumers through their debit cards is efficient.
Second, BNPL and debit cards share a key value proposition: both support consumers in managing their budgets more effectively during the purchase process.
Third, they appeal to similar customer segments. Specifically, they both appeal to individuals who either do not have access to traditional credit or who prefer to avoid it. Like debit cards, BNPL is a payment alternative to credit cards.
For BNPL providers, offering a debit card became a natural next step. Allowing them to expand their user base, increase usage frequency, and reach consumers who are particularly attentive to budgets and cash flow.
Dig deeper:
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- Bundling Debit with BNPL Is the Next Big Thing in Cards
BNPL Turns Debit Cards Into Go-To Payment Methods
For debit card issuers, the case for integrating BNPL into their offerings developed more gradually. In the early stages, offering BNPL to debit cardholders was often seen as a competitive response to larger players in the market.
Pierre Cardenas, President and CEO of Capitol Credit Union of Texas, described it as a strategic move: “We’re in a hyper-competitive environment with very large financial institutions all around us. We need technology to differentiate ourselves and play bigger.”
After implementing BNPL, many financial institutions discovered its broader impact. It not only met consumer preferences, but also served as a catalyst for card growth.
An increasing number of financial institutions are enabling BNPL on their debit cards each year. In 2025, the number of institutions adopting BNPL for debit cards tripled compared to the previous year. These institutions observed positive impacts in areas such as card usage, consumer engagement, and non-interest income. An analysis of debit card usage in the months before and after BNPL implementation with equipifi revealed the following:
- Higher spending: Among active BNPL users, average monthly purchase volume increased from $85 to $115.
- Increased frequency of use: Customers used their debit cards more frequently once BNPL was introduced, indicating a stronger top-of-wallet position.
- Larger purchases: The average transaction size increased by $8, suggesting that consumers were making higher-value purchases with their debit cards after BNPL was enabled.
These outcomes are consistent with the benefits BNPL has brought to other sectors, such as eCommerce. Many consumers, particularly from Gen Z and Millennial demographics, say the availability of BNPL influences their purchasing decisions. Some even indicate they would not make certain purchases without it. Research shows that consumers tend to spend more and buy more frequently when BNPL is available, and that they are willing to switch to banks that offer the features they value.
For debit cards, which have not evolved significantly over time, BNPL represents a meaningful innovation. With BNPL, financial institutions gain increased usage, stronger positioning, and the opportunity to grow their card programs.
How Smart Debit Cards Support Primacy
Achieving “primacy”, or becoming a consumer’s primary financial institution, is a core strategic objective for most banks and credit unions. This goes beyond simply holding accounts. It involves earning consumer trust and becoming their preferred provider for financial products and services.
Today, that goal is increasingly difficult to reach. Competition now includes not only other financial institutions, but also retailers and fintechs that offer financial products.
For example, Walmart launched OnePay Later, and Costco partnered with Affirm. These moves are intended not only to facilitate transactions but also to influence long-term purchasing habits. Klarna’s stated goal is to “disrupt retail banking and become an everyday spending partner to the world’s consumers.” Affirm uses 0% interest promotions to acquire new users and retain them by offering Affirm issued debit cards. As of June 2025, Affirm reported over 2 million activated debit cards, drawn entirely from its existing customer base. Whoever owns the shopping and repayment process, owns the customer relationship.
These developments challenge the traditional role of financial institutions. However, offering in-house BNPL programs allows financial institutions to retain control of both the transaction and the repayment. By integrating BNPL into the checking account relationship, they keep customers within their ecosystem and strengthen loyalty and engagement.
BNPL Is a Necessary Strategy for Financial Institutions
At this stage, continuing to question whether BNPL is a short-term trend misses the broader industry shift.
BNPL has proven to be a powerful driver of customer acquisition, engagement, and primacy. Fintech companies have been expanding into this space with urgency and focus.
Financial institutions that implemented BNPL early are already seeing the benefits. These programs allow them to remain competitive, retain customers at the point of purchase, and grow interchange revenue in ways that fintechs will find difficult to replicate. According to J.D. Power, consumers feel significantly more satisfaction using BNPL from recognized traditional card issuers.
In practice, banks and credit unions that offer in-house BNPL programs find that their customers prefer them over third-party providers. equipifi reports that over 80% of BNPL users return to their financial institution’s program year over year, with a 34% increase in transaction volume compared to the previous year.
The Future of Credit and Payments
The future of credit and payments is shifting toward debit cards that are enhanced by BNPL functionality. These smart debit cards provide consumers with flexible, budget-friendly options, while helping financial institutions increase engagement and strengthen their position as the primary financial provider.
